Apple Recap: Apple TV Skeptics and Apple’s Supply Chain

AAPL (NASDAQ:AAPL) Down In Volatile MarketThe market is sinking deeper into the red as the European debt crisis remains very real. Shares of AAPL are down close to 1% as the the rest of the tech tape slips even lower. Catalysts include iPhone upgrade cycle and response to the free iPhone 3GS; update to the iPad in early 2012; continued growth of the Mac business line; penetration in China and emerging markets; the evolution and reconstruction of Apple TV; and platforms such as mobile advertising (iAd), books / publishing and social (Ping). Shares of Apple trade at 8.9x Enterprise Value / Trailing Twelve Months Free Cash Flow(including long-term marketable securities).

CBS Spills the Beans, Apple Likely To Launch Streaming At Some Point (VentureBeat)
Leave it to Les Moonves to accidentally reveal details about an ad-supported Apple TV streaming video service, but said the company will need to pony up. The network turned down Apple’s proposal to bring CBS content to its new service because the deal involved splitting the advertising revenue over time. This type of deal is very similar to the agreements Hulu has with ABC, NBC and Fox. If the service is ad-supported for television content, that would explain why Apple is hesitant to add access to Hulu Plus on the Apple TV.

An Apple-Branded TV Not Likely, Says Analyst (Forbes)
The idea of Apple entering the television set industry has always caused an eruption of opinion. I’m sure that was the case before the iPhone with the handset business. But Sanford Bernstein analyst Toni Sacconaghi believes that even if Apple could secure the necessary content rights, it would still have to fight hard to grab a 3% share (about 8 million units) of the flat panel TV market. It could make as much money selling 3x as many Apple TV boxes at 1/6 the price.

iPhone 4S Sells Out Pre-Orders In Hong Kong (Barron’s)
Ticonderoga Securities analyst Brian White says the iPhone 4S, which went on sale Friday in Hong Kong on a pre-order basis, sold out within ten minutes according to channel checks. He believes this “will rest concerns surrounding the uptake of the iPhone 4S in the Greater China region that were driven by the limited language capability of Siri.” White also expects mainland China will get the device next month. He reiterates his Buy rating and $666 price-target (what a brutal price-target).

Apple Has Over 10% Mobile Phone Users In U.S. (comScore)
comScore released third quarter mobile subscriber market share data for the U.S. showing that of the 234 million Americans who are of age 13 and older, 10.2% of them own an iPhone. Apple ranked number 4. Samsung came in first with 25.3%, LG came in second with a 20.6% and Motorola was third with a 13.8%. The number of smartphone users rose 12% from the previous quarter, or 87.4 million subscribers.

The Success Behind Apple’s Supply Chain (BusinessWeek)
The success story began when Steve Jobs returned to Apple in 1997. He basically “built a closed ecosystem where it exerts control over nearly every piece of the supply chain, from design to retail store.” But because Apple does huge volume, the company can wholesale discounts on everything from parts to manufacturing to air freight. It is worth mentioning that this is an area where Tim Cook excels. The company has also been known to ship products in unmarked tomato boxes.

Apple Global Security Head Leaves After Two Lost iPhone Prototypes (Various via iDygest)
Apple vice president of global security John Theriault has left his position at the company following an investigation over a lost iPhone 4S prototype earlier this year. While the reasons for Theriault’s departure and his destination appear to be unconfirmed, two lost iPhones in the last few years probably didn’t go down well. This is another departure, regardless of the reason, that adds to the sizable amount of Apple senior executives have left the company this year.

Apple Pays Senior Vice Presidents A Good Chunk Of Change CNet
SEC filings show Apple’s top executives getting bonuses with big payouts. The company gave out 150,000 shares each to most of its senior vice presidents, short of recently-minted SVP Eddy Cue, who received a slightly smaller 100,000-share bonus, and design guru Jonathan Ive, who is an SVP, but does not fall under the SEC’s section for directors, officers, and principal stockholders. That works out to just over a $60 million payday to those who got the 150,000 shares.